Skip to main content
11:00 pm
for androgel 1.62%. what are you waiting for? this is big news. i'm jim cramer, and welcome to my world. >> you need to get in the game. firms are going to go out of business and he's nuts! they're nuts! they know nothing. >> i always like to say there's a bull market somewhere. "mad money." you can't afford to miss it. >> hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i just want to help you save money. my job is to coach and teach you. call me at 1-800=743-cnbc. we are told that when the market is up this much, good things are supposed to happen. dow took a beating, s&p edged up and nasdaq gained 2.1% thank you apple and bell. we hear stories that october is rarely down. you are supposed to buy stocks
11:01 pm
and all of this nonsense. here is what you need to know. all of these pithy observations and patterns, they are worthless. they are inconclusive at best and downright misleading at worst. in short they are a total waste of time and tonight you are going to learn why. you probably ask me why did we spend so much time talking about them? i don't talk about them on "mad money." no, i know better. people talk about this garbage, because patterns are great for grabbing people's attention. a veneer of authenticity. this is a big one. let's see, in the first tuesday in the first month of a new
11:02 pm
quarter we have been up 1.2% unless it was a friday. when you seem so authoritative, people are going to bite. buy buy buy. this data captures the imagination of the editors of the day books. as pattern recognition is supposed to make people a lot of moolah, but it doesn't. i call these kinds of patterns lovey blankets. something that makes you feel more secure. it really couldn't protect you from anything. why am i so dismissive of these stats? when i used to trade for a living i would regard going against it as tempting fate. a lot of that judgement came from something that happened in the crash of 1987.
11:03 pm
it paid to be negative going into october. i did that for years. the trouble with this analysis is it works right up until it stops working. october is just on the calendar. but i bring this up, in a few days i'm sure you will hear that history could repeat itself. this kind of thinking, some of you might sell stocks because we have an anniversary. i want you to make decisions based on the fundamentals of the companies that you own. and then the impressionist factors. the feds attempt to jump start the u.s. economy by any means necessary. think about how many people might have sold in october last year. why doesn't this calendar style of investing interest me as a method to make money? simple.
11:04 pm
every year there is a way to make money. let me give you some concrete examples of why this is a lazy force that is nothing but a lovy blanket. first, when most of these numbers or patterns were created, the u.s. was in control of its own destiny. our financial system is connected with europe. do you think any of the historical data takes on that tectonic shift that we have to deal with? no, do you think i would be ringing a gong five years ago? this is kind of a recent event, you know. gong show. i cannot recall another time when the federal reserve is taking the step to lower the interest rate if the economy gets better.
11:05 pm
that means you have to lower stocks. history shows it has to be one. of course it didn't pay to sell those stocks in september. september is the worst month for investing. third, there is apple. we've never had a $600 billion stock before. we've never had a stock that is so much bigger than every other stock. if i could see a stat that says on the third thursday of every month ending with the letter r we have been higher? i would say wait a second. was apple a $6 billion company? the only thing was that you were supposed to eat oysters in that month. the banks used to be a reasonable place to invest. these days book values are kind of meaningless. with the banks you have a cohort that trades off the justice department and the state
11:06 pm
attorneys general. how is that? show me another time when we had a set of circumstances and i'll show you how that group acted. as for tech, ever since it became its own sector, the personal computer was the backbone of the group. history is worthless as the guide. finally, i'm aware of any studies based on the calendar, today on fast money an unbelievable show i watched mark cuban talk about the malignant impact of high frequency trading and how it has driven the trader out of the market. we could have radical crashes caused by the machines that wreck any previous patterns. in the end, what steams me about the stock market pseudoscience,
11:07 pm
is the false sense of security it engenders. as we got through the difficult month of september and now we are fine. that is really helpful. until october turns bad, here is the bottom line, the problem with these patterns is that they help until they don't. they give you comfort when there is no reason for it. my advice, ignore the calendar, do the homework. a broken stock clock, right twice a day. bill in ohio please, bill. >> cramer, booyah from canton, ohio, the football hall of fame. >> dawkins belongs but he never made a super bowl so go ahead. >> talking about mpc a company that is poised to take advantage of opportunity crews.
11:08 pm
what do you think? >> i agree. i think it is a terrific situation. they he don't understand about the bakken and the eagle ford. and mpc is a winner in that situation and not a loser. let's go to robyn in california. >> hi, jim. booyah. i read that a rise in christmas shopping is expected this year. my question concerns mattel or other kid oriented stocks, whether they rise during the holiday season and what you think they will do this year. >> the fundamentals are more challenged than i like. the toy cohort did not have a good back to school season. mattel would be the one that i like. it has a 3.5% yield. the forecasts about holiday season is going to be, they are based on nothing. that is total thumb sucking. they ought to go bet on the
11:09 pm
browns. whatever, anyway, use the calendar to remind you when your anniversary is. not for investing. anyway, wow, try looking at the fundamentals, not your desk calendar. stay with cramer. >> coming up, cash crop? the midwest biggest drought in decades sent shares of mosaic up to 52 week highs. after failed earnings should you be harvesting your gains or doubling down? cramer talks exclusively to the ceo next. >> and later, retail rumble. wall street is at war over a big box giant, and when the analysts disagree it is your time to make "mad money." cramer is giving you a price check on costco. plus, seller's market? real estate stocks have been soaring. tonight cramer turns to the technicals to see if they are
11:10 pm
built to go higher or if their foundation is no longer stable. all coming up on "mad money."
11:11 pm
11:12 pm
11:13 pm
we practice buying homework not buying whole. consider the agricultural space. people in developing countries are eating diets with more and more meat which requires more grain. that is a huge trend but itself it is not enough to own the
11:14 pm
stocks at any given moment. like i told you last friday, the fertilizer plays are real wild traders. mosaic sells phosphate and potash, two of three primary crop nutrients. now mosaic has run up from the mid 40s to more than $60 that sent crop prices up. revenues that fell 18.7% year over year. the problem, management indicated that demand for their products outpaced their ability to deliver and they said they expect better distribution. so what should we make of this quarter? let's talk to jim, the president and ceo of mosaic company. welcome to "mad money."
11:15 pm
>> oh, thank you for having us on the show, jim. >> i want to start with the long-term. because the long-term is so important. we have a situation that wants to get better diet. that means where is mosaic positioned in the longer term food chain in this world? we are seeing more people to feed every year. that is regardless of what is happening in the country or in the world. there is one way to provide more food for the people in the world. that is the farms having greater yields around the world. the fastest way to increase yields is better fertilizer. >> what i think people will say is wait a second. i played this group.
11:16 pm
remarkable call and remarkable slide presentation. thank you. something is wrong with mosaic, the world changed right, that is what changed? >> nothing is wrong with mosaic. what has changed is the world's appetite for risk. we are seeing dealers, prices ran up and people are reluctant to position product into their warehouses. they are waiting to see what farmers are going to do. there is no doubt that farmers are going to plant for maximum yields. it is a matter of timing. but when they are and it is much closer to the seeding time or the fertilizer time they will be applying it in good volumes. good volumes in india and china. big population growth and a middle classification of both countries. yet those were not stronger
11:17 pm
markets for you. >> they weren't stronger markets for a couple of reasons. india, they heavily subsidize fertilizer to farmers. they are reducing subsidies for farmers. prices are going to be higher. they have been subsidizing farmers for 15 years. they are making good returns in india. in china, slightly different story. they have built the inventories and they are able to ride that cushion and probably into the new fiscal year before they start buying. although india and china aren't buying we are seeing the emergence of malaysia and demand starting to grow and they are filling in the holes that are left by india and china. >> one of the reasons that the stock went down, they said that there were one time problems
11:18 pm
involving hurricane isaac and river volumes and some rock that needs to come from florida. you solved problems or they went away. and the set up of the stock being down doesn't take into account that the next quarter, you may not have any of those problems. >> that is it. those are transient problems. we are not going to likely have weather disruptions. mississippi river. low rates, low levels that's flowing. that is going to pose some problems but it is going to start raining again this fall. it will start again this year and the mississippi will rise and we will find ways to work around. we have trucks, rail and we can get the product to customers. that won't be an issue. some of the operational issues, those things happen.
11:19 pm
this is an asset and a lot of processes involved. we had a couple of surprises and we dealt with them and we are going to see higher operating costs. >> one of the things threw me in. complicated story. mr. lawrence stranghorner said that -- i google ammonia and it's largely methane. he said that is likely to go up substantially in the second quarter. i was surprised at that. >> that was larry our cfo. he was referring to ammonia prices which are largely driven by natural gas. it is from natural gas. depending on your view of natural gas prices going forward that is driving the price of ammonia. we are going to have it as
11:20 pm
stable, but the demand has been very, very strong. the u.s. imports about 700 million tons, much of that comes from the caribbean or from eastern europe. the russians are setting the price $8, or $7 gas price. we are going to see a boom in ammonia plant construction while 10 million tons has already been announced. it will correct, we will see lower ammonia prices and in our case, that could be sooner rather than later. we usually pass that through as a cost to the phosphate production. it will pass through rapidly to the end user. it seems like next year, when the cash expires in may, when
11:21 pm
you begin to buyback stock, it could be a terrific year for mosaic. >> you are right. we have $3.6 billion of cash and only $1 billion of debt. we are well positioned. what we are working to do is maintain our flexibility for the may 2013 expiration of a lockup on some shares from the spinout of cargill just over a year ago. we have in the meantime increased our dividend by 25 cents a share last december to where it is now $1 a share. so we have been returning cash to the shareholders as well as having the flexibility for the expiration of the lockup. we want to have a good cushion of cash and take advantage of
11:22 pm
whatever opportunities may come along in the year ahead. >> thank you jim. >> that is the president and ceo of the mosaic company. >> thank you, jim. >> guys, look, short-term. longer term, you know who i feel about the agricultural stocks. i think they are going to be bullish. after the break i will try to make you more money. >> coming up. retail rumble. wall street is at war over the future of one retail giant. and when the analysts disagree, it is your time to make "mad money." tonight cramer is giving you a price check on costco. >> and later, seller's market. housing has been on the mend. real estate stocks have been soaring. tonight cramer turns to the technicals to see if they're built to go higher.
11:23 pm
on a new edition of off the charts coming up on "mad money." [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. n you take a closer look... the best schools in the world... see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects.
11:24 pm
as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... they can inspire our students. let's solve this. [ feedback ] attention, well, everyone. you can now try snapshot from progressive free for 30 days. just plug this into your car, and your good driving can save you up to 30%.
11:25 pm
you could even try it without switching your insurance. why not give it a shot? carry on. now you can test-drive snapshot before you switch. visit today. with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart. costco, a company with a rather expensive stock thanks to
11:26 pm
a fabulous run. what should we do with the stock of costco? two well respected research firms grabbed our attention by publishing a pair of notes that could disagree. we got all the ingredients. two analysts enter only one leaves. situation. raising price objectives to $110. premium multiple warranted. you are not overpaying. where they argued that the stock has room to run.
11:27 pm
given the fact that they are trading. the very next day in the other guy's face. bernstein research. summertime rally. but is there an october surprise in store? bernstein believes that it could be too rich if the estimates are too high. who is right? the bullish bank of america or the bernstein bears. bank of america already had it as a buy. these were both pieces where the analysts reaffirmed their positions. bank of america have been behind costco for years as i have and they nailed the recent rally. they have been fighting the move all year and have kept you out of the monster really. however, just because they have been right doesn't mean they are going to keep being right.
11:28 pm
as much as i like costco stores, and i'm a costco guy, for the moment, i have to tell you, i agree with the view of the stock. even though as you know this is my absolute favorite thing to prepare. and can you ever really get enough crumbled bacon? why is bank of america so positive? i feel like they are making unsafe assumptions. they think it should have a strong fall and holiday season. i get all that paper, the cards. paper that i don't have from pop's store. get absolutely everything for the holidays at costco. these guys like the accelerated new store opening. 602 stores worldwide and they
11:29 pm
are adding 23-30 this year with more than half in the higher margin international markets. they like that costco which has more than 66 million members boosted its membership fees and that is just profit. bank of america assumes that the average ticket price will increase by 1%. these guys have been hammered by the large screen tv price wars. i still think it is a risky assumption given what bank of america is doing. and have you seen the prices of 61 inch screens? they are being football left and right. you can nail down a samsung for $1300 all in. or you go with -- i've been shopping. for the most part i agree with
11:30 pm
the picture that bank of america paints with costco. the problem is with the stock. if bank of america is right and they are going to rally 10.5%. that is not enough upside for this guy. the analyst has been wrong. the guy has raised his price from 88 to 94. he tells you not to buy it but he gives a price increase. they think the rally will fizzle though. they know that they have been reinvesting for several quarters. that is something that the former ceo told us. he said we got to take price cuts or keep pricing down to satisfy the customer because the customer is right. bernstein points out that this
11:31 pm
is something costco has done. that means the company's margins probably won't be as strong as the customer is expecting and this stock could be hammered. the real clincher is what bernstein has to say about valuation. this is what worries me. bernstein points out that costco's stock to remain flat, would have to sell for 20 times earnings. listen to this. the moment that they trade at 22 times earnings and it has a 22 point long-term earnings. if anything goes wrong. it will shrink rapidly. up here, price matters. the stock is priced for perfection or it will indeed go lower. i bet the stock will go down
11:32 pm
because it has run so much. in my view, all right, play with an open hand. my charitable trust sold costco at $92.55 back at the end of june. if it goes below $90, then and only then will the trust think about building a new position. you can argue that the trust got out too soon. i understand that criticism. i care too much about valuation to attempt to make those risky points. i'm always going to take a pass on those. everyone who says they sold at the top tends to be liars. i think the bullish bank of america is right about the company but bearish bernstein is right about the overexpensive stock. this one is too expensive to own. wait for a pull back.
11:33 pm
i always take the maine lobster dip and take a pass on the stock. mike in wisconsin, mike? >> yes, booyah, big fan, love the show. >> what is going on out there in wisconsin? >> we are still getting over the seattle call. >> i would never get over that. i just carry a grudge like that. i tell my kids to be angry. go ahead. >> my stock is jc penney. given the recent news, the store up 20%. has the stock bottomed? >> you know, that is like, do you know what that stock is? it is a replacement ref stock. i'm not going to put any money on replacement ref stock. >> let's go to sebastian in alabama. >> booyah cramer. i have a question about lulu
11:34 pm
lemon. recently hit its 52 week high. when is a good selling point? >> today it went up because there was a noted money manager who did not say negative things about it. i think nike should have bought lululemon, it is a great growth story. i saw the stock on the move today. i said it goes higher still. the bulls at bank of america are right about costco the company. but the bernstein bears are going to be right about costco the stock. stay with cramer. >> coming up, seller's market? housing has been on the mend and real estate stocks have been soaring.
11:35 pm
tonight, cramer turns to the technicals to see if they are built to go higher or if their foundation is stable.
11:36 pm
11:37 pm
11:38 pm
it is time for the lightning round. and then the lightning round is over. are you ready? start with robert in florida robert? >> hey jim, i want to give you a florida state booyah. >> go noles, what's up? >> my stock is 3-d systems. >> i got to do more work on this. this has been a hot stock but it looks like it is rolling over. let me do a technical and fundamental analysis before i opine on it. >> let's go to john. >> booyah this is john from the windy city. >> congratulations on last night's victory. >> ticker symbol nok?
11:39 pm
>> it is not okay to own that one. n-o-k. we are going to skip nokia. i will sanction no longer short selling research in motion. how about mark in maryland? >> jim, a big thank you booyah from my wife. my question is regarding gourdman's. is this an excellent buying opportunity? >> again, i know this sounds like i'm punting a lot. i don't know how the last three months of comparable stores have been, but i have to do my homework on this one. i'm not ready and up to speed. tom in california. >> two israeli communication stocks. partner and cell. ptnr and cel. >> i have been saying cel, please do not touch it.
11:40 pm
it is way too risky for me. billy in pennsylvania. >> yes, jim, booyah from steelers country who host your eagles on sunday. i bear no malice and how can i make money with you? >> okay. my question, pay big dividends 10%. windstream. >> we had them on. i was not convinced that this company was going to do very well. i'm going to say no. i'm going to armen in california. >> first time caller. my stock is annaly. >> american capitol agency is the one i want to own. and that is the conclusion of the lightning round. ♪ [ male announcer ] this is karen and jeremiah.
11:41 pm
they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. n you take a closer look.... the best schools in the world... see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... they can inspire our students. let's solve this.
11:42 pm
11:43 pm
11:44 pm
in dividends we trust. even if the economy gets stronger and you expect the feds to start tightening. that is why tonight we are checking up on a group of stocks that are renowned for beautiful yields. the real estate investment trusts. why? consider the ishares dow jones real estate etf. you can't decide on a single reit so you buy the whole cohort instead. it is up 12.9%. but in the last few weeks, we have been worried because this has been body slammed. we want to know if this is a
11:45 pm
garden variety pull back or the start of something worse. tonight we are going off the charts to figure out if the real estate investment stakes are done. he is a brilliant technician and perhaps the most reliable guy i have been dealing with on charts. take a look at the iyr daily chart. you can see that over the last few weeks this thing has been put through the proverbial meat grinder. is this a pull back off the recent time or are there signs of something more sinister? there is a developing head and shoulders pattern here. there you go. that is one of the most dreaded topping formations out there. not because because it could get in their eyes or something. this pattern tends to be reliable when it comes to predicting tops. it has been forming and in order
11:46 pm
to get a head and shoulders it should trade sideways for a week or two, something that he doesn't consider likely. so you know, not a disaster. even without a head and shoulders chart, this has seen a bunch of bears developing for the last couple of weeks alone. when you look at the investment trust, it was from the 65/50 level. that was a monumental breakout. and when that happens the old resistance becomes the new floor of support. in this case the iyr flunked the test as soon as it started. it takes out the ceiling and the floor and the floor did not hold. even worse, after the iwire broke down, it failed to recapture that level, but it
11:47 pm
never succeeded. once again a ceiling of resistance and this time a harder one. after the third day it tried and failed to break back. it looked as if the bulls had given up. white flag. it took a big tumble. and this time the iyr tried to reclaim that and it has led to still one more break down yesterday. this is the money flow. it takes both price and volume into account. buying pressure drives it up and this breakdown has been accompanied by a move in the money-flow index. that tells us that in the past it relieves that pressure before the price can start moving higher again.
11:48 pm
we are finishing the first over sold week today. it could be another whole week of pain as sellers unload. not a sign of the bottom. right now the iyr is approaching a gap area. we don't want it to fall into the gap. and stocks tend to fill in these gaps, which means if the iyr falls through the gap, it is going to the bottom at $61.50 like that. he doesn't think this etf will reach a floor of support until it falls to 60. oh man that is a little more than four points below where it is right now. what about the weekly chart? is this longer term view less grim? collins sees a glimmer of hope but also reasons to fear. it is a very long wedge pattern that is dating back over a year.
11:49 pm
the wedge is still holding up. it looks to collins like history could be repeating itself. it has another long wedge pattern here. just like now that in the summer of 2011. it is similar to what we are seeing right now, and look what happened. it got crushed. momentum indicator, securities come in at 2011. it fell from an over bought position down to normal. look at this. the same thing that happened here is happening here. could it be presaging that? i don't know. collins would suggest that the real estate investment, they could be due for a serious sell off. probably not as bad as that one
11:50 pm
but still serious. things might not play out the totally negative way, the wedge pattern is still holding. if it could hold above the base of the wedge pattern, maybe the massive break down could be avoided. if it doesn't hold, that is more than $8 down. and it is going to cost a lot of people a lot of money. over the last few weeks, reits have been pounded. don't forget this has been the best formed group. the reits may have to come down further. wait for a lower price or a better looking chart. nobody got hurt by being patient. i'm going with collins. "mad money" is back after the break. ally bank.
11:51 pm
why they're always there to talk. i love you, james. don't you love me? i'm a robot. i know. i know you're a robot! but there's more in you than just circuits and wires! uhhh. (cries) a machine can't give you what a person can. that's why ally has knowledgeable people there for you, night and day. ally bank. your money needs an ally.
11:52 pm
11:53 pm
should we care that google market capitalization just passed the value of microsoft? we don't want to sell google and buy microsoft, but we have to note that the trajectory speaks to older generations. a younger google does. before i dissect the two writing off microsoft could be a brutal mistake here. the company stole base too much going forward to ignore. because it hasn't gotten back to
11:54 pm
the turn of the century doesn't rule out a run. the problem with microsoft is that it is linked to personal computers and they are no longer a growth business. when you buy tech you buy tech for growth. now, microsoft has done amazing things. their gaming software is incredible. i welcome their new software. they cannot be written off. but microsoft suffers from something that is deadly when it comes to the demographic it must own if it is to stay relevant for the next 25 years. the problem, it is not cool. go talk to your kids. talk to people in college. i have never ever heard a kid say i'm stuck with this miserable apple and i want a
11:55 pm
microsoft operating system. i've never heard someone say the new windows is so exciting now i can junk my mac. people from our generation don't get this at all. they are too old. they are too old. but as this new generation comes to the floor the intel people will die off. and with them will come microsoft. they are not junking the mac for the hewlett packard. as anyone of middle-age dismisses the value of cool. here is why that is wrong. steve ballmer before bill gates was viewed as a suit. steve jobs was viewed as bono, bond and beethoven. you don't want to spend anytime with the microsoft guys and i know steve.
11:56 pm
i sat next to him at a reunion. but when you read walter isaacson's biography of jobs. he was a man, and everyone wanted to hang with him because he was the coolest man in the room. meanwhile, google is the logical heir to apple. google has all the monetizing momentum you could have on your cell phone and that is why the stock is going higher. the default go to tech name is google. it is the financial equivalent of a judgment over who is cool. google is and microsoft isn't. the gulf is growing, which is why google up here is the one to own. stay with cramer.
11:57 pm
11:58 pm
11:59 pm
>> reports after the bell. i tell you i do not comment or recommend stocks on a takeover basis. it is going to send sprint further down. jim, are you abandoning sprint?

Mad Money
CNBC October 2, 2012 11:00pm-12:00am EDT

News/Business. (2012)

TOPIC FREQUENCY Cramer 11, Bernstein 8, Google 7, India 5, China 4, Booyah 3, Collins 3, Microsoft 3, California 3, Florida 3, Steve 2, Wisconsin 2, Mattel 2, Isaac 1, Bacon 1, Bakken 1, Dawkins 1, Nokia 1, Jim Cramer 1, Steelers 1
Network CNBC
Duration 01:00:00
Scanned in San Francisco, CA, USA
Source Comcast Cable
Tuner Virtual Ch. 58 (CNBC)
Video Codec mpeg2video
Audio Cocec ac3
Pixel width 528
Pixel height 480
Sponsor Internet Archive
Audio/Visual sound, color

disc Borrow a DVD of this show
info Stream Only
Uploaded by
TV Archive
on 10/3/2012